2023-04-22 18:53:27
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by Alfred MIGNOT, AfricaPresse.Paris (APP)
@alfredmignot | @africa_presse
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« From the investor’s point of view, the most important element is first of all the availability and quality of information. And this is particularly true with regard to Africa, where the opacity of information is frequent ” immediately notes Læticia Balou, panelist at the VIIIe Conference of African Ambassadors of Paris, organized by AfricaPresse.Paris on April 12 at the Academy of Overseas Sciences.
Defusing this latent distrust in such a way as to reassure potential investors is a first step, considers the president of LB Global-Consulting. “ It is certainly not a question of disguising the information ! On the contrary, we highlight the various risks incurred by the company, and we also present the strategies to mitigate these risks. » A very concrete method of which Læticia Balou presents an overview by reporting the examples of two business projects that she has accompanied, one in the poultry sector, the other in the production of household appliances.
« The first thing we do is identify the challenges in the sector. In the first case, there were two major challenges: insufficient organization of value chain actors ; the very high cost of food. To meet this type of challenge, we proposed to the company to integrate all the stages of the value chain into its project. That is to say produce food to feed the poultry, raise them, ensure the transformation until marketing. »
In the front row, LL EE the Ambassadors, attentive during the presentation by Læticia Balou… © F. Reglain
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Launch phasing and
investment segmentation
Launch phasing and
investment segmentation
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In the initial project, explains Læticia Balou, this company had planned seven activities contributing to the value chain, from breeding to distribution. And it was a huge challenge to want to operationalize them at the same time. Also, the recommendation was to organize these different activities into specialized divisions, and to launch them gradually.
The phasing of the launch of the various activities also had another very important advantage: reducing the perception of financial risk. Because the investment sought by this company, 300 million euros, was very high, and a priori such a sum frightens investors. This apprehension was largely lifted by the phasing of a successive launch of activities, with a first fundraising of 30 million euros, a second of 50 million with well-defined specifications, the operational finalization of each phase being a before starting the next step.
« This is rather reassuring for investors, notes Læticia Balou, before adding: the last risk, often the most important, is that of operations. The management and founding team of this project did not have all the skills required to take on all the activities. We have therefore not only put in place the recruitment process, but also strategic partnerships, in particular to allow a transfer of skills from French companies, which has mitigated the risks on all services.
Finally, “ the document presented to investors must be clear and precise, because they often make a counter-analysis of the studies presented by the companies “, emphasizes Læticia Balou.
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Beware of risk
of addiction !
Beware of risk
of addiction !
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The second case mentioned by the leader of LB Global-Consulting was the creation of a manufacturing plant for household appliances – refrigerators, air conditioners, freezers, etc. – in a region with no such factory, while the need is growing. growing with the growth of the population. The particularity of the project was that its promoters had established a strategic partnership with a single Chinese manufacturer. With therefore a risk of total dependence on this strategic partner, the latter alone having to supply the raw materials and ensure the manufacture of household electrical products.
To reduce this risk, two actions have been taken: link the two structures by an obligation to transfer skills by training people locally ; engage in other strategic partnerships in order to have recourse in the event that the main partner fails in any way.
A view of the conference room of the Academy of Overseas Sciences during the intervention of Læticia BALOU, April 12, 2023. © F. Reglain
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The second significant risk observed in this project was due to an overly optimistic income estimate… something that makes the investor very wary. ! A counter-analysis to validate the data is therefore necessary in these cases. Another weak bridge was due to the stagnation of results from the moment the company reached its maximum production capacity. The solution consisted in setting up services to differentiate themselves from other suppliers on the market, with not only quality after-sales service but also attractive sales conditions.
How to do better ?
Among the commercial risks, precisely, reports Læticia Balou, there was also the strong competition from the second-hand market, products from the second-hand market, at a price a priori rather reasonable. But importing raw materials into the country costs twice or even three times less than importing finished or second-hand products. This delta made it possible to have new products at an unbeatable price. “ We have therefore initiated discussions with the competent authorities to ask either to overtax second-hand products or to ban them completely. It is still under discussion, knowing that the authorities asked us to prove that we could satisfy the need “says the leader.
Finally, concerning political risk, i.e. a situation where the country’s economic activities are at a standstill or severely hampered, LB Global-Consulting’s recommendation is to anticipate this hypothesis by deploying on the external market. , starting with neighboring countries.
So, all these parameters being considered, how can the promoters of entrepreneurial projects do better to reduce the perception of risk? ?
« It is by improving their management, their organization, by strategic planning of objectives that each company or business project can reduce its exposure to an excessive perception of risk, get support if necessary. “, considers Læticia Balou.
« It is worth it, because there is a whole panoply of investment funds interested in Africa. And let’s not forget: the investor who has as much information as possible is much more reassured, and in a certain way more inclined to put their perception of risk into perspective and positively “, she concludes.
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The personalities of the panel and a few others who participated in our VIIIe Conference of African Ambassadors in Paris (from left to right in the photo): S. E. M. Alaa YOUSSEFAmbassador of EGYPT ; Mr. Alfred MIGNOTPresident AfricaPresse.Paris, designer and moderator of the CMAAPs ; SE M. François AS LOCALAmbassador of RWANDA ; Mme Lucia PETRYPresident of BPL Global France ; Mr. Etienne GIROSPresident of Cian ; Mme Læticia BALOUPresident of LB Global Consulting ; SEM Ayed Mousseid YahyaAmbassador of DJIBOUTI ; M. Zied LOUKILPartner Mazars France ; SE M. Vijayen VALAYDONAmbassador of MAURITIUS ; M. Emmanuel PEZÉ, Vice-President Africa and Middle East of TINUBU. © F. Reglain
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